Key Decisions

February 2013 – A Release Released Everyone

(filed under: Key Decisions | February 22, 2013)

A Release Released Everyone

Rodriguez v. Oto
(Cal. Ct. of App., 6th Dist.), filed January 15, 2013

KEY FACTS

A vehicle operated by Takeshi Oto collided with a vehicle operated by Heriberto Ceja Rodriguez.  Unbeknownst to Rodriguez, Oto was driving from an event related to his employment by Toshiba America, Inc.  While Oto had rented his vehicle from Hertz, Toshiba ultimately reimbursed him for the rental.  The rental was governed by an agreement between Hertz and Toshiba, setting forth terms on which Toshiba employees could rent vehicles on company business.

Rodriguez hired an attorney the day after the accident.  He settled with Hertz for $25,000, the limit of its coverage for bodily injury or death.  As part of the settlement, he executed a written release in favor of “Takeshi Oto and The Hertz Corporation, its employees, agents, servants, successors, heirs, executors, administrators and all other persons, firms, corporations, associations or partnerships (hereafter Releasees).”

Rodriguez did not believe he was releasing Oto’s employer from responsibility for the accident.

Rodriguez sued Oto and Toshiba, alleging that Oto injured the plaintiff through negligent operation of a vehicle, and that Oto and Toshiba, “and each of them,” negligently “owned, operated, used, drove, maintained, loaned and/or entrusted their motor vehicle,” so as to cause his injuries.  Oto and Toshiba answered the complaint, asserting the release as an affirmative defense.

Oto and Toshiba moved for summary judgment on this basis.  Rodriguez opposed the motion on the merits, but also requested a continuance to conduct discovery.  The trial court granted summary judgment, finding that the undisputed evidence established that the release explicitly exonerated Oto from further liability and that it also extended to Toshiba.

HOLDING & REASONING

The Court of Appeal affirmed.  It reasoned that “As a matter of plain logic, Toshiba — along with every other person or corporation in the universe –

belongs to the class thus absolved of liability.  The question is whether this logic alone is enough to establish, in the absence of countervailing evidence, that Toshiba is entitled to the protection of the release.”  The court ruled it was enough.

The court rejected Rodriguez’s argument that a defendant who is asserting a defense based on a release must present additional evidence, extrinsic to the written agreement of the parties’ “actual intent to benefit the third party.”  The court held that insofar as some language in the cases might appear to support such a rule, such a rule arises from, and should be confined to, the distinct issue of whether a stranger to a contract, who stands to benefit from its performance, is an “incidental” beneficiary, rather than an “intended” one entitled to enforce its terms.

ANALYSIS

This case emphasizes the care that should be taken when analyzing or drafting release agreements.